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Tinkler, Aston open cut to the chase

Countryman

Only weeks after a board shakeup, the Nathan Tinkler-controlled Aston Resources has announced a merger with Whitehaven Coal to create the largest independent Australian coal company on the ASX by market capitalisation.

The merger arrangement would mean each Aston shareholder receives 1.89 Whitehaven shares in an all-script deal while existing Whitehaven shareholders would receive a special fully-franked dividend of $0.50 per share.

If successful, the expanded Whitehaven would then move to buy Mr Tinkler's private coal exploration play Boardwalk Resources, creating a company with a market capitalisation of $5.1 billion (at closing share prices on December 9).

Whitehaven and Aston have adjacent coal assets in the Gunnedah Basin in northern NSW.

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Aston owns the proposed Maules Creek open-cut mine that it acquired from Rio Tinto in 2010, while Whitehaven has the large Narrabri underground mine and a series of smaller open-cut mines including Werris Creek Sunnyside, Tarrawonga and Rocglen which between them produced 4.2 million metric tons of coal last year.

Maules Creek is scheduled to start production in the second quarter of 2013, with the merged entity aiming to steadily ramp up production to 25 million tonnes by 2016.

The proposed new company board has Aston deputy chairman Mark Vaile as the new chairman with Whitehaven chairman John Conde as deputy chairman, while Whitehaven managing director Tony Haggarty is to be the managing director of the new company. Mr Tinkler, who has a controlling 31.6 per cent shareholding in Aston, says he will support the merger "in the absence of a superior proposal" but he will not take a seat on the board.

If you would like to subscribe to Cameron Bartram's weekly market update, please feel free to contact him at Sentinel Stockbroking on 08 9225 0028 or email cbartram@sentinelgroup.com.au .

Disclaimer: Information contained in this article does not consider your personal circumstances. You should consult a stockbroking professional before making any investment decisions. Sentinel may hold positions in stocks discussed from time to time.

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